Aside from the details of his story, Hersh offers at the beginning a blunt analysis of how the neo-cons are feeling at the moment:

George W. Bush’s reëlection was not his only victory last fall. The President and his national-security advisers have consolidated contro over the military and intelligence communities’ strategic analyses and covert operations to a degree unmatched since the rise of the post-Secon World War national-security state. Bush has an aggressive and ambitious agenda for using that control—against the mullahs in Iran and agains targets in the ongoing war on terrorism—during his second term. The C.I.A. will continue to be downgraded, and the agency will increasingl serve, as one government consultant with close ties to the Pentagon put it, as “facilitators” of policy emanating from President Bush and Vice-President Dick Cheney. This process is well under way.

Despite the deteriorating security situation in Iraq, the Bush Administration has not reconsidered its basic long-range policy goal in the Middle East: the establishment of democracy throughout the region. Bush’s reëlection is regarded within the Administration as evidence of America’s support for his decision to go to war. It has reaffirmed the position of the neoconservatives in the Pentagon’s civilian leadership who advocated the invasion, including Paul Wolfowitz, the Deputy Secretary of Defense, and Douglas Feith, the Under-secretary for Policy. According to a former high-level intelligence official, Secretary of Defense Donald Rumsfeld met with the Joint Chiefs of Staff shortly after the election and told them, in essence, that the naysayers had been heard and the American people did not accept their message. Rumsfeld added that America was committed to staying in Iraq and that there would be no second-guessing.

“This is a war against terrorism, and Iraq is just one campaign. The Bush Administration is looking at this as a huge war zone,” the former high-level intelligence official told me. “Next, we’re going to have the Iranian campaign. We’ve declared war and the bad guys, wherever they are, are the enemy. This is the last hurrah—we’ve got four years, and want to come out of this saying we won the war on terrorism.”

The story in a gist: this show is being run by neocon Likudniks with unknown and unacknowledged degrees of Israeli logistical and operational support (and probably quite a lot of influence since Israeli intelligence tends to be quite important.) And then they say Arabs have a tendency to believe in wild conspiracy theories.

Update: The Pentagon is now calling Hersh a conspiracy theorist -- take a look at the strongly-worded press release about his article. It's possible the guy could be wrong, but at this point I don't really believe a word they say. Remember Iraq's WMD? Another possibility is that some sources deliberately misled Hersh to discredit him -- I can't really remember such a strongly worded denial. Read a lot more about this at Praktike's.

Also, on the Israel connection they say:

Arrangements Mr. Hersh alleges between Under Secretary Douglas Feith and Israel, government or non-government, do not exist. Here, Mr. Hersh is building on links created by the soft bigotry of some conspiracy theorists. This reflects poorly on Mr. Hersh and the New Yorker.

However, the Guardian has learned the Pentagon was recently contemplating the infiltration of members of the Iranian rebel group, Mujahedin-e-Khalq (MEK) over the Iraq-Iran border, to collect intelligence. The group, based at Camp Ashraf, near Baghdad, was under the protection of Saddam Hussein, and is under US guard while Washington decides on its strategy.

The MEK has been declared a terrorist group by the state department, but a former Farsi-speaking CIA officer said he had been asked by neo-conservatives in the Pentagon to travel to Iraq to oversee "MEK cross-border operations". He refused, and does not know if those operations have begun.

"They are bringing a lot of the old war-horses from the Reagan and Iran-contra days into a sort of kitchen cabinet outside the government to write up policy papers on Iran," the former officer said.

He said the policy discussion was being overseen by Douglas Feith, the under secretary of defence for policy who was one of the principal advocates of the Iraq war. The Pentagon did not return calls for comment on the issue yesterday. In the run-up to the Iraq invasion, Mr Feith's Office of Special Plans also used like-minded experts on contract from outside the government, to serve as consultants helping the Pentagon counter the more cautious positions of the state department and the CIA.

"They think in Iran you can just go in and hit the facilities and destabilise the government. They believe they can get rid of a few crazy mullahs and bring in the young guys who like Gap jeans, all the world's problems are solved. I think it's delusional," the former CIA officer said.

They also say that Bush will make a major announcement on this issue in his inauguration speech.

Issandr El Amrani is a Cairo-based writer and consultant. His reporting and commentary on the Middle East and North Africa has appeared in The Economist, London Review of Books, Financial Times, The National, The Guardian, Time and other publications. He also publishes one of the longest-running blog in the region, www.arabist.net.